Merchants Hurting Merchants – The ‘Direct to Merchant’ Saga

WHAT IS DIRECT LINKING aka DIRECT TO MERCHANT?

When I refer to Direct to Merchant it is related to PPC Advertising (e.g., Adwords) and is where an affiliate, instead of sending traffic to their own site, pays for that traffic and sends it directly to the merchants Landing Pages.

This link is simply an affiliate link. There’s nothing shady about it.. and many merchant’s are perfectly fine with that practice including me. It’s the offline equivalent of a sales person recommending a product and getting credit (in the form of a commission) for the referral who they sent directly to that merchant.

IN THE BEGINNING…

I’ve seen a lot of things over last 5+ years with the affiliate marketing industry; especially from a PPC Advertiser’s perspective. Some of it has been positive and some of it negative.

You have merchants that are very affiliate friendly and ‘get’ the relationship. And you have other merchants that are very self-centered and don’t look at the affiliate as a partner at all. And when I refer to merchant’s in this post it includes Affiliate Managers as well.

And I’m under no illusion that self-centered attitude will change for a lot of merchants who don’t believe in the affiliate relationship or care… If I learned anything being in business over the years, in most cases, the changing of minds happens slowly if at all. Especially when poor ideas gain momentum and become mainstream.

But if this post does one thing and changes one merchants mind about the Direct to Merchant issue, then it’s worth the time I put into it today.

In the early days of PPC advertising, more specifically Adwords, we found it very easy to link our PPC Ads directly to the merchants landing pages they provided. It was a win-win situation… it made a lot of people a lot of money on both sides.

In those days less merchants knew how to advertise using PPC because it was a newer advertising channel and these Affiliates who devoted their time to learning this new way of driving traffic helped them a great deal.

When one of us affiliates came along, many merchants were suddenly overwhelmed with new business that we drove through PPC channels. I’ve even heard stories where merchants ended affiliate relationships because they couldn’t keep up! Some affiliates are responsible for the greatest percentage of sales for a given merchant.

THE BEGINNING OF A REPLICATING VIRUS..

But then in the last few years, a virus of sorts started to spread throughout the merchant community. It started very subtly… a few merchants here and there wouldn’t allow affiliates to link to them directly. It appears in the last year or so networks like CJ made it easier to communicate their policies on their details pages and merchants started copying each others approach to affiliates..

Reasons for anti-affiliate policies? The two main one’s I see play out…

1. Branding Protection.
2. The desire not to share profit per sale.

There are companies that are very, very protective of their Brands. And they may have very good reasons based on a larger picture. So #1 above I can understand in some circumstances, but not in most. Because the benefit of being overprotective of your brand does not in most cases outweigh the alternative benefits in this space.

So though I agree it’s a companies right to employ that policy, many companies copy that without considering that it might not be a good move for their smaller company that could use the help of affiliates to actually grow their brand and traffic.

#2 above.. poor judgement. Because what a merchant saves there is small compared to the potential of profits when unleashing an affiliate army on the Search Engines Results Pages.

A POOR STANDARD SPREADS…

But what’s happened is this way of doing business with affiliates has spread and become a standard that is replicated from merchant to merchant… in other words, when a merchant sets up an affiliate program or reviews their affiliate program to improve it, they look to other merchants and see what they’re doing and you see this established practice of not allowing affiliates to link to them directly among other negative things replicated.

What they don’t take into consideration are things like:

1) The other merchants business model
2) The other merchants reasons which may not apply to their business
3) The other merchants ability to protect brand over making profits

So a lot of things aren’t considered. They just think, “Wow, this successful merchant must know they’re doing, I’ll just emulate it.”

Bottom line is, the model of not allowing direct linking is not always beneficial to every merchant on the planet. Allowing affiliates to link directly to a merchants website instead of going through their own landing pages sometimes is a good business decision!

HOW MERCHANT’S CAN BENEFIT FROM DIRECT LINKERS

EXPERIENCE OR LACK THERE OF…
When you have a new merchant who is coming into a very competitive market, that knows very little about Pay per Click advertising, they will benefit greatly from an affiliate who has a LOT of experience; maybe even years in the trenches. A less experienced merchant can tap into an army of affiliates with a wide range of experience and knowledge to compete.

The more affiliates they get on board the better… having limitations for affiliates can work against the merchant competing against other established merchants and affiliates.

Experienced affiliates, if they can attract them, will know tricks and techniques to compete with PPC that someone with less experience will not. It takes talent and experience to be good at PPC marketer. Many advertisers devote their lives to PPC and are the ones to get on board – often no cost to the merchant!

Merchants attempt to attract these affiliates so they can work hard for them on dominating the results pages and defending their space in the search engines.

LESS RISK… AND THE WASH
Even though a merchant shares a little bit of the profits to affiliates, it’s very possible they are making more money overall because these experienced, specialized affiliates can do a better job and cast a wider net across all potential keywords. There are many markets that are very competitive, are old markets that experienced affiliates protect. You need as much help as possible! Why risk it on your end…?

Really it’s a wash. You could spend money in-house on hiring PPC experts (like anything some are good and some are bad – so there is a built in risk there too), paying them, paying the costs of advertising or you could just pay the affiliates that are out there only on the business they send you.

NOT ALL IS LOST YET…

Now there are still a lot of merchants that do allow Direct to Merchant linking… so not a total loss yet. This is especially true in the digital product arena. Especially with e-books (most Clickbank merchants ‘get’ the relationship).

I suspect there will always be some percentage that settle out and allow direct linking. That’s probably working itself out right now; I just want the percentage to stay more on the side of the affiliate than not.

Even with my own products and memberships I allow, in fact encourage, direct linking and don’t plan on changing that ever!

But what’s happening is in networks like Commission Junction… a lot of merchants (especially physical product merchants) are taking on this hard-line approach to NOT allowing affiliates to direct link without really understanding the consequences to their business and profits.

A BETTER APPROACH…

If you are a merchant, have bid restrictions only on those keywords you yourself are bidding on instead of sweeping rules that will squash your opportunity to get into keyword niches you haven’t thought of. There might be thousands of keyword combination’s you’re not discovering where an experienced affiliate will pick up those and drive the traffic to you on their dime.

Build an affiliate army that will defend more space and keywords (keywords you may not have the experience, time or knowledge to think of..) from your competitors.

Benefit from the experience and knowledge of those that are experts with PPC without any cost to you besides an affiliate commission on business you may not have gotten in the first place..

Your brand could actually get more exposure if you are friendly to affiliates. Not all affiliates are going to hurt your brand.

Groom affiliates, build relationships with them, who are successful with Direct to Merchant who could eventually build their own websites, their own e-mail lists and drive even more traffic to you someday as their profits grow and they invest in their business.

Help affiliates instead of working against them to be better and send more business to you long term. THAT is an excellent business decision.

Set lighter rules that benefits you and the affiliate.. and doesn’t squash profits for you. Again, things like, “You can’t outbid the merchant on the keywords that they are competing on.” Which leaves open opportunity for your affiliates to find other keywords you aren’t bidding on..

If you don’t like a certain approach that affiliates take (like using scam or other dirty words in their ads), then don’t allow it. But don’t make umbrella policies that hurt everyone; that hurts good, legitimate affiliates. Not all affiliates use these tactics or need to.

———-
Lots of things to think about.. this is a post I’ve wanted to make for a long time as I see more and more merchants blindly follow the pack of those who made a decision that is right for them — but may not be right for others. And maybe it’ll stimulate some more discussion on this topic and make more merchants really think about their policies.

Do your established policies help? Or are they really hurting you?

Don’t limit your potential as a merchant by making broad rules that only hurt your business and profits just because the other guy thinks it’s the right move for their business.

-Matt Levenhagen

ALSO SEE:

A Public Discussion at aBestWeb.com

• …Working with PPC affiliates

One last note that sort of relates to this same topic. I see affiliate managers advancing things like this that don’t even have all the facts right. I heard recently one my my member’s merchants not allowing direct linking because that is stealing bandwidth.

It’s sometimes our jobs as affiliates to educate the very people put in charge to help us. Just because they are in charge doesn’t mean they have more experience than you or know all the right things… Let’s clean this mess up!